Germany: hedge funds’ lawsuit against Porsche SE dismissed

A German court has recently decided to set aside the claims from hedge funds that investment company Porsche SE caused financial damage to their holdings when it tried, and failed, to assume control over VW AG back in 2008.

The hedge funds were seeking reparations worth 1.2 billion euros in a court claimed that implicated two dozen firms, including Viking Global Investors, Glenhill Capital and Greenlight Capital, which in 2014 claimed Porsche SE allegedly had a secretive strategy to purchase a majority stake in VW AG in 2008 – although the investment company already had enough share options to achieve an effective majority stake in Europe’s biggest carmaker. The court which dismissed the claims also denied the hedge funds the right to appeal, although German law allows for the plaintiffs to address a higher court, Germany’s Federal Court of Justice, for the right to appeal the current decision.

Porsche quickly issued a statement after the court rule, saying the decision was an “important victory”, and reminded the hedge funds it was the fifth consecutive time that such complaints were set aside. The case is only one of several civil lawsuits against Porsche SE, filed in numerous German courts and asking for total compensation worth north of five million euros. The cases surround Porsche SE’s march 2008 dismissal of reports that talks had started for the investment company to assume control over VW AG, although seven months after that it announced it had taken over 74.1 percent of VW’s common stock, failing short of the necessary 75 percent goal for a complete takeover.